McCain and the Mortgage Crisis: A Profile in Gall

March 27, 2008

Loved John McCain‘s speech Tuesday to a bidness group in Orange County, California, when he said:

“It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

But it is a senator’s duty to haul the federal government’s chief investigator of financiopaths to a private meeting with five senators to get him to ease off. That’s what McCain and the rest of the “Keating Five” did on behalf of schnook Charles Keating.

Douglas Frantz of the New York Times did a fine job back in 2000 of detailing McCain’s suck-up relationships with Arizona swaggarts like Keating and Arizona Republic publisher Darrow “Duke” Tully. Not to mention that McCain entered politics thanks only to his wife’s money as heiress to the biggest Budweiser distributorship in Arizona.

As Frantz put it at the time:

After his arrival in Phoenix, Mr. McCain did not have to wait long for his chance at politics. Representative John Rhodes, a veteran Republican from the Phoenix suburb of Mesa, decided not to seek re-election in 1982.

Mr. McCain defeated two longtime Mesa Republicans in the primary, including a state senator, and he went on to win the general election. He defused accusations that he was a carpetbagger by saying the place he had lived longest was Hanoi.

Records show that he outspent his opponents in part through access to his wife’s family wealth. He received $11,000 in contributions from [Budweiser baron Jim] Hensley and company employees. More significantly, though he had little money of his own because he had been a career naval officer, his wife’s fortune allowed him to lend $167,000 to the campaign, which was permissible under campaign laws then.

Additional money was raised by another powerful Phoenix businessman who served as a big benefactor, Charles H. Keating Jr., the corrupt savings and loan operator whose ties to Mr. McCain continue to haunt the senator. Years later, Mr. McCain intervened with federal regulators on behalf of Mr. Keating’s savings and loan, an episode that has tarnished the senator’s reputation as a reformer.

So why didn’t the Times’s John Sullivan look at his own paper’s clips and at least put in a paragraph or two of perspective in his story about McCain’s firm stance against bailouts?

As a freshman senator, however, McCain took a different approach. In early 1991, the Senate’s ethics committee concluded that McCain “exercised poor judgment in intervening with the regulators” on behalf of banker Charles Keating Jr. Keating was a wealthy Arizona real estate developer and owner of a California thrift that failed during a nationwide savings and loan crisis – when Keating and other bankers made risky investments with depositors’ money.

McCain was known for accepting contributions from Keating, flying to the banker’s home in the Bahamas on his company planes and taking up Keating’s cause with U.S. financial regulators as they investigated him. Keating served more than four years in prison for fraud.